NAHB index continues its sideways slide
* The overall Housing Market Index rose 1 point to 19 from 18 in December. December's reading was revised down from 19, however. That means this indicator of builder confidence has essentially slid sideways since October.
* The subindex measuring present single-family home sales held steady at 19, while the subindex measuring prospective buyer traffic inched up to 14 from 13. Meanwhile, builders are apparently a bit more optimistic about the future. The subindex measuring expectations for future single family home sales rose to 28 from 26. That reading is the highest since August (31).
* Regionally, the HMI was unchanged in the Northeast (at 20), up 2 points in the Midwest (to 17 from 15), and up 3 points in the South (to 23 from 20), but down sharply in the West (to 13 from 18).
Housing demand remains in the dumps, according to the latest builder's survey, with current sales trends and buyer traffic anemic. But optimism about the future appears to be picking up, perhaps because the Federal Reserve has signalled it's getting ready to pull out the "big guns" and cut interest rates more sharply. It's also worth noting that the Mortgage Bankers Association's purchase mortgage application figures have perked up a bit in early 2008.
But I wouldn't break out the party hats just yet. For starters, the MBA's mortgage figures are historically volatile in the weeks surrounding the holiday season (See this post for more details). Those figures also capture APPLICATIONS, rather than APPROVALS. Fewer loan applicants are likely getting the green light from lenders, given the tighter standards now prevalent throughout the home loan industry.
The other problem with expectations about the future? They can deflate quickly if improvement doesn't manifest itself. And there's a pretty good chance builders' optimism about the next six months will prove misplaced if unemployment keeps rising and the economy slumps toward -- or into -- recession.